Powys Council Tax bills could rise by 13 per cent because of the price of borrowing for capital projects

 A senior councillor has asked how Powys County Council can pay for its ambitious capital programme if it can’t sell off assets including county farms.

Concerns about the affordability of the Capital Programme which is around building new schools, maintenance to existing council buildings and assets, was brought up at a meeting of the Liberal Democrat/Labour Cabinet on Tuesday, October 14.

At the meeting, councillors received an update on the council’s Financial Planning, which includes the latest economic projections and how it affects their medium-term financial strategy over the next five years.

The report said that the council has a capital programme worth £557 million over the next five years.

While funding would come from the Welsh Government and UK Government in the form of grants, a substantial amount would need to be paid for by the council itself – which would mostly come from borrowing.

This could see the need to pay annual borrowing worth £31 million to fund spending on projects.

While the council already models an annual Council Tax increase of five per cent in its budget planning, the need to cover the borrowing costs could mean this would need to increase.

Opposition councillors clubbed together in July to bring forward a successful motion to scrap an annual asset sales target of £10 million and a pause put on selling off county farms.

Any money made from assets sales would have been ploughed back into the capital programme in the form of “capital receipts” which would have replaced the need to borrow so much money.

Council leader Councillor Jake Berriman (Liberal Democrat -Llandrindod North) said: “I’m really conscious of the gap between our aspirations in the capital programme and affordability.

“I want to open up a discussion around the affordability of the programme.

“I do feel we’re under some significant strain in relation to borrowing and need to take some immediate steps to address that.”

He added that he was “particularly keen” to hear what suggestions came from the Finance Panel on how the council can control capital spend.

The Finance Panel had received the report last week and had provided a number of recommendations to Cabinet, which included concern about the capital programme affordability.

Finance Panel Chairman and Conservative group leader Councillor Aled Davies said that the council needed to find out the “variation of borrowing costs” across Welsh local authorities and see “where we sit in comparison.”

Cllr Davies added that the panel wanted to see a 10-year capital programme published as: “School transformation is such a slow process.”

Cllr Berriman said: “I’m asking you quite specifically, where the money is coming from?

“Part of the process has to be the rationalisation of assets.

“I’m asking whether the Finance Panel has anything positive to say about that, as the majority of council itself felt I should not continue with the sale of council farm assets.”

Cllr Davies replied: “Happy to look into that and a working group will be set up with the Learning and Skills committee.

“Decisions have to have clear business cases and evidence of what’s best for our residents and the next generation.”

Cabinet went on to agree the report